‘Business outcomes are as important as data’

The bar is significantly higher in terms of problem solving than in the past, says Dipanjan Basu of the expectations from his job of CFO at fashion retailers Myntra and Jabong.Vartika Rawat | ETCFO | August 02, 2018, 18:59 IST

Dipanjan Basu who heads the finance function for both Myntra and Jabong is one of those CFOs who has worked with companies which have been ‘born digital’. He believes there are fewer unknowns and therefore more manageable risks in a digital business. Here in a chat with ETCFO’s Vartika Rawat, he shares the intricacies of his job at an e-commerce company. Edited excerpts:

Q: What are the challenges that you see for the e-commerce industry in India right now?Dipanjan Basu: The pace of the business has changed. E-commerce being a relatively new industry works at a higher pace. Even if you take any other industry, for example, IT services, the growth rate and the expectations to work faster is higher than before.

The challenge now is how does innovation lead to growth? In India typically the challenge has been that the growth has been driven by the business model. In the retail world, especially in e-commerce, there is lot of consumer shaping that is required because you are also training the consumers, shaping a new market that was not existing. That is true for the entire startup economy, as lot of new products are and new innovations are coming. The challenge is around those innovations being relevant to the consumers.

And how to continue to shape the consumer behaviour – that has implication on the financials of the company. Therefore, that is a big opportunity, where if you tap it and harness it in the right way, it can be hugely beneficial for the industry.

Q: Dataanalytics is at the core for any organisation. There was a lack of data earlier but not there is abundance of it. This has made things complex. How would you leverage it completely to maximise value in business?Dipanjan Basu: The preceding step to data analytics is to understand what business insights you want to drive. What to expect, how to design the output and insight from it is very critical. For example, like any company we have large supply chain inventory, we have data on who is buying, what item from whom and so on. You can derive various insights, but you can get lost while doing analytics first.

What you need to do is get the insight first on what and why you want to analyse. A lot of organisations miss out on this. If you don’t define the output properly, no analytics can be useful. So what CFO or business leaders should do differently is that—understand that we have a large amount of data and large part of it is untapped as the outcome is not defined appropriately.

If you have a sharper thinking on what the business output should be – and now we have the data to support – in the past we did not have this kind of data, now you should not lose out on the opportunities.

Eventually, you want simple business outcomes and hypothesis first, that you would like to drive. And the data should enable you to do that. If you swim in the ocean of data, you don’t know where you will reach.

Supposedly, you do the A/B testing — very advance stage of data analytics where you experiment with various outcomes and see what works — for that you need hypothesis and creating those is as important as much as the data sitting behind.

Q: How has your experience with e-commerce been so far?Dipanjan Basu: It was a big change and it was different. When I joined Wipro it was the new born digital at that time and now e-commerce and new tech companies are born digital. However, the difference is that the industry is going through lot of innovation. Being able to be relevant to the decision making, finance just cannot play the role of an observer or a gatekeeper alone, therefore finance plays integral role in taking the company forward and gives you the opportunities to be part of the decision making not only on finance but product. Here while you are thinking as a CFO you are also thinking as an individual and a consumer. That is exciting. You can be in any function and put on the thinking hat to make the decision and contribute.

Q: How does the role of a CFO change when joining an e-commerce company?Dipanjan Basu: The ways of working and ways of driving decisions are different in an e-commerce company when compared to a traditional organisation. Therefore, the expectations from CFO are not only to be a traditional controller or gatekeeper – while that continues to be the expectations of the board and the investors because the CFO ultimately has to be the conscience keeper.

So not taking away that guardrail, (the expectations are about) how CFOs can become true business enablers. In terms of problem solving, the bar is significantly higher than what it was in the past.

Therefore, you have (to be) a tough stakeholder. So policies and processes have to be set in place. You have to think simplification, you have to think speed. You have to be an enabler on both ends.

People do want to get away with approvals, but from my point of view that does not mean losing control. And, that is the new way of working.

Every discount change, every small product change, selection of the inventory, and even the small tweak on warehousing finally has a financial implication. Helping teams take the right decisions is most important.Dipanjan Basu

Q: What were the new kind of responsibilities that you have as a CFO of the e-commerce company?Dipanjan Basu: Returns: This is the area of great importance to any e-commerce company. That is the part of their business model. There is no other way to analyse returns but to have deep analytical point of view on where it is happening and why it is happening.

The uncommon part was sitting with the product team and designing those experiments to say—if you change the button from here to there, will the returns increase or decrease. Or thinking from a consumer point of view and understanding what the root cause of it is? So we did experiment on size and fit—so those are the things which are not truly within the finance ambit, but I have been a core part of it.

I don’t know if I was being the finance guy, the product guy or just the consumer. That, however, is the real thing to be solved so that the CFO can drive a better financials.

So the unique thing (here) is that every small thing impacts the financials. Looking at the industry, every discount change, every small product change, selection of the inventory, and every small tweak that you do on warehousing finally has a financial implication. Helping the teams to take the right decision is the most important thing to do. It has been a great learning experience so far.

Q: How has the experience with GST been for your organisation?Dipanjan Basu: GST as a concept has been great. Last July, there was small hiccups. From a logistics point of view, we are down to five days from 6-7 days earlier.

Q: Being the CFO of a digital organisation, what keeps you awake at night?Dipanjan Basu: The risks would go up because the complexity of business will continue to grow. Therefore being aware of all the unknowns in the business, given the diversity of the business and complexity which data or system and processes could bring in is important. We should have right controls for the unknowns. Being tech-led gives you that assurance that there are fewer unknowns.

As a digital organisation, I will be less worried than normal organisation.